U.S. Stocks Remain On Track For Their Worst Year Since 2008

It is Christmas, and the stock market is closed for the holiday. That comes after record-breaking Christmas Eve losses. U.S. stocks are on track for their worst December since the Great Depression. This slide has caught the attention of President Trump who said on Twitter yesterday that the, quote, "only problem with the economy is the Federal Reserve." And this comes, of course, after the Fed raised interest rates again last week. Let's talk about all of this with NPR White House correspondent Tamara Keith and NPR business editor Uri Berliner - both on the line this morning.

Good morning to you both.

TAMARA KEITH, BYLINE: Good morning.

URI BERLINER, BYLINE: Good morning.

GREENE: Well, Uri, let me just get right to it. The president, as we heard, saying that the Fed is solely responsible for the market tumble we're seeing. How legitimate is that argument?

BERLINER: Well, the Fed policy does affect markets. But there are a lot of other factors, too, like the trade dispute with China and consumer spending and the level of corporate earnings and geopolitics and what's going on in the global economy. So it's not fair to say that the Fed is the only factor affecting the markets.

GREENE: And what about the Trump administration itself? I mean, it seems like there's been a lot of uncertainty in Washington over the past few days. Could that be playing a role?

BERLINER: Well, it sure could. I mean, especially the last several days, you had the resignation of the defense secretary, James Mattis. You have a partial government shutdown. You have the president again attacking the Fed chairman. And all of these things just heighten the sense of chaos - of uncertainty in Washington, and that isn't very encouraging for investors.

GREENE: Tam, let me turn to you. I mean, President Trump for so long prided himself on being a businessman. And then he would talk, I mean, quite often about the stock market being a sign that the economy was doing well, though a lot of people dispute whether that's a real connection. So given a moment when we are seeing this slide, how's he dealing with it?

KEITH: Yeah. You know, a lot of presidents are reluctant to take too much credit for the stock market when it's doing well because then there is the problem of...

GREENE: Then this can happen.

KEITH: ...When it isn't doing well.

GREENE: Yeah.

KEITH: And, you know, just as recently as last month, President Trump was at rallies boasting about how great people's 401(k)s are doing - saying, you know, your wife must think you're so smart; you're such a great investor because your 401(k) is doing so well - and taking credit for it. And now he can't do that. And so you see him sort of lashing out at the Fed, something that has been going on for a little while. He simply doesn't think that the Fed should be raising interest rates, and he's made no secret about that.

GREENE: So you mentioned he, I mean, has been tweeting. He's been tweeting a lot it seems like. And one thing we should say is he is in the White House and was not supposed to be. He was supposed to be in Florida, right?

KEITH: Right. He was supposed to go to his Florida club Mar-a-Lago and be there with his family. Instead, the first lady Melania Trump had to fly back up to Washington, D.C., to be with him here in Washington. Yesterday he tweeted, I am all alone, poor me, in the White House waiting for the Democrats to come back and make a deal on desperately needed border security. The government shutdown is why he's not in Florida. Last night he was taking calls from kids as part of the NORAD Santa tracker. And reporters were asking him about the shutdown, and this is what he said.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: Nothing new - nothing new in the shutdown. Nothing new, except we need border security.

KEITH: And for their part, yesterday Chuck Schumer and Nancy Pelosi, the Democratic leaders, put out a statement and said, in part, it's Christmas Eve, and President Trump is plunging the country into chaos. They're saying that they're getting different messages from different people in the White House. Every time they talk to someone, they get a different sense of what the president might be willing to accept for the shutdown to end. And so really, negotiations are going nowhere.

GREENE: Uri, let me bring this full circle and just come back to one very specific question that's come up in this conversation. I mean, the president blaming the Fed for what we're seeing in the markets. There's been talk of maybe him even firing the Fed chairman. Is that even possible if the president wanted to fire Jerome Powell?

BERLINER: Well, several of President Trump's advisers, including Treasury Secretary Steven Mnuchin, say that the president understands that he doesn't have that authority. And as far as we know, no president has ever tried to fire the Fed chairman. But the answer isn't entirely clear. The law says that members of the Fed, including the Fed chair, can be removed by the president for cause. And presumably, that means breaking the law or something highly unethical - not about a disagreement over interest rates. And that's how it's been interpreted by legal scholars, but that statute hasn't really ever been tested.

KEITH: Well, and this is a remarkable thing. Uri says that - the treasury secretary is out there saying the president understands that he can't do this. The president himself did not send out any reassuring tweets on that. All he did was tweet an attack on the Fed.

GREENE: Uri, let me ask you one other thing that may be related or not. We had this weird news from Treasury Secretary Steven Mnuchin. He was saying that he called top bankers over the weekend to talk about their liquidity. I mean, was - were there worries about how well banks were able to lend at this moment? What was this all about?

BERLINER: Well, that was what was strange. The economy's doing really well, as we've noted. There's been no concerns raised about the availability of credit, either for consumers or businesses. So for the treasury secretary to come out and tweet about his meeting with six top bankers saying that they have ample liquidity, they have - they can meet the needs of borrowers, it raised more concerns than soothed them in the markets. And the markets didn't respond well to that.

GREENE: Although the president has conflated the two during - at times during his presidency, which has confused that a little bit.